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Senate's Version of Bailout Bill for Automakers

Here are the highlights of the Senate's version of a bailout bill to help troubled Detroit automakers GM, Ford and Chrysler. It was introduced this afternoon by Speaker Harry Reid (D-Nev.).

The House did not meet today but Speaker Nancy Pelosi (D-Calif.) met with Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke, presumably to persuade them to allow money from the $700 billion bailout/rescue plan to be spent on Detroit, a course of action the administration has resisted.

Highlights of the Senate plan include:

-- $25 billion in 10-year low-interest loans, charging 5 percent interest for the first five years and 9 percent for the remainder of the loan terms.

-- Parts-makers as well as the Big Three would be eligible.

-- The money would come from the $700 billion rescue/bailout plan.

-- A prohibition on bonuses for automaker employees making more than $250,000 per year.

-- Fast processing: Eligibility for loans will be determined within 15 days of application.

-- Fast turnaround: The loans would be distributed within seven days of approval.

-- "Clawback" provision: Bonuses can be taken back by the government if executive statements are found to be inaccurate.

-- No golden parachutes of any sort.

-- Companies receiving these loans cannot pay dividends for the duration of the loan.

--Frank Ahrens

The Ticker is Twittering!

By Frank Ahrens  |  November 17, 2008; 5:33 PM ET
Categories:  The Ticker  | Tags: Detroit bailout  
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Comments

Oh dear - Pelosi and her friends will get burnt badly on this issue. Saving the US Automakers is a lose /lose situation.

Bail out the Automakers & there will be a risk of the total collapse of the US economy - The automakers can devour $700 bn with ease without turning the corner.

Don't bail out the US automakers & the resulting unemployment (if no buyers materialise) - then this will be a personal disaster for millions.

Let the market decide, and as a business consultant, I can safely advise that the US automakers have much more to offer than manufacturing. The distributor network is gold & would attract keen competition from the remaining market competitors.

23 years ago, it was forecast that there was only room for 5 primary manufacturers in the global auto industry.

Getting closer but still in double digits!

Posted by: Richard_Prior | November 17, 2008 7:30 PM | Report abuse

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